Budgeted Operating Data, Third Quarter 2017 Variable Cost Contribution Sales Volume Margin per Unit in Units Selling Price per Unit $181 PalmPro $373 $192 10,215 PalmCE 270 38,817 100 170 PalmKid 140 80 60 53,118 102,150 Actual Operating Data, Third Quarter 2017 Sales Volume Variable Cost Contribution in Units Selling Price Margin per Unit $ 195 per Unit 12,360 PalmPro $370 $175 PalmCE 280 96 184 42,230 PalmKid 48,410 110 76 34 103,000 1. Compute the actual and budgeted contribution margins in dollars for each product and in total for the third quarter of 2017. 2. Calculate the actual and budgeted sales mixes for the three products for the third quarter of 2017. 3. Calculate total sales-volume, sales-mix, and sales-quantity variances for the third quarter of 2017. (Calculate all variances in terms of contribution margins.) 4. Given that your CEO gets very angry if actual results differ from budget, you want to be well prepared for this meeting. In order to prepare, write a paragraph or two comparing actual results to budgeted Required amounts.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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